Goldman Sachs’ Hatzius: What US Manufacturing Comeback?

The idea an American manufacturing renaissance is under way may sound good, but there is little evidence it is true, according to Jan Hatzius, chief economist for Goldman Sachs.

Although the manufacturing sector has added jobs since 2009, Hatzius said in a research note obtained by Business Insider that the boom has not yet shown up in data yet. What may appear to be a big upswing may just be a cyclical bounce-back, he said.

Hatzius does not buy into the idea that America’s glut of natural gas will give U.S. manufacturers an advantage, according to Business Insider.

To the contrary, Hatzius believes “we have not yet seen a material pickup in output in the parts of the manufacturing sector that should benefit most from low natural gas prices, such as aluminum, steel, plastics, basic chemicals, and fertilizer and other agricultural products.

“At least so far, the benefits from the increase in U.S. energy production seem to have been confined to the direct effects on output and income.”

Energy costs are still a small factor for the majority of companies, which helps to explain why Hatzius does not see a large permanent manufacturing comeback at this point, according to The Washington Post.

Hatzius also believes that U.S. exporters have tended to gain share in recent years only because of significant depreciations in the U.S. dollar.

“If anything, U.S. export performance has tended to fall short of what one would have expected based on currency movements,” he wrote.

Hatzius expects manufacturing to outperform, and he is optimistic it will be a driver of job growth.

“But we believe the reason for this will be broad economic improvement that benefits all sectors, especially the more cyclical ones, not a structural U.S. manufacturing renaissance,” he said.

Harry Moser, founder of the Reshoring Initiative, a national organization concerned with bringing back American manufacturing jobs from overseas, acknowledged that the effort has far to go, The Cleveland Plain Dealer reported.

"It's more than a trickle," he said of the jobs returning from overseas. "But we'll admit that it's less than a torrent."

According to Moser, 50,000 manufacturing jobs returned to America from 2009 to 2012.